# ITV delivers a robust operational and financial performance in Q1 - Link: https://www.directorstalkinterviews.com/itv-delivers-a-robust-operational-and-financial-performance-in-q1/4121064120 - Published: 2022-05-11T07:50:05+01:00 - Author: Amilia Stone **[ITV plc](https://www.directorstalkinterviews.com/ftse-company/itv-plc/itv.l)**( LON:ITV) has announced its Q1 Trading Update for the 3 months to 31 March 2022. > **Carolyn McCall, ITV Chief Executive, said:** > “ITV has achieved strong Q1 revenues driven by a robust operational and financial > performance with 23% revenue growth in ITV Studios, a 16% increase in total advertising > revenue as expected and 24% increase in digital revenues. > “We are focused on the three core drivers of value for ITV.  We are growing Studios > with a strong quarter and an exciting pipeline of scripted and unscripted programmes > as we further diversify the business by genre, by geography and by customer and > grow ahead of the market. In Media and Entertainment, we maintained the strength > of our linear business where we secured 93% of the largest commercial audiences. > And we are making good progress in our goal to supercharge streaming by increasing > our hours of content by 50% in the quarter to 6,000 hours and making available > the majority of scripted programmes in full for streaming at the same time as > the initial broadcast. > “All of this provides a solid foundation for ITVX – our free, ad-funded streaming > service – which is on track for launch in Q4 and we remain confident that we will > deliver at least £750 million of digital revenue by 2026. > “We welcome the Government’s recognition in the Media White Paper of the huge > value the Public Service Broadcasters (PSBs) deliver to the UK and their determination > to reform the legal and regulatory framework to ensure PSBs, including ITV, have > prominence, inclusion and fair value for their content and therefore are able > to continue to thrive in the future.” **Continued strong financial performance for the three months to 31 March** ●    Total external revenue was up 18% at £834 million (2021: £709 million) ●    Total ITV Studios revenue was up 23% at £458 million (2021: £373 million) ●    M&E revenue was up 13% at £545 million (2021: £483 million), with total advertising revenue (TAR) up 16% **Operational update** **ITV Studios:** ●    Q1 was particularly strong with a wide range of new and returning programmes and formats delivered in the UK and internationally, including a number of programmes delayed from Q4 2021. Deliveries in Q1 included: ○    _Holding, Why Didn’t They Ask Evans, Noughts and Crosses S2, Murder in Provence_ and _Physical S2_  **Media and Entertainment:** ●    Total advertising revenue (TAR) for 2022 has started well ○    TAR was up 16% for the three months to the end of March 2022 with good demand across the majority of advertising sectors. January was up 15%, February up 20% and March up 15% compared to the same period in 2021 ○    Within this digital advertising revenue remains very strong, up 27% to the end of March compared to the same period in 2021 ●    Total non-advertising revenue for Q1 was down marginally with good growth in subscription revenue offset by the expected decline in SDN revenue and interactive revenues against tough comparatives in 2021 **Digital Acceleration: Delivering Phase Two of our More Than TV strategy** **ITV Studios:** ●    ITV Studios has an exciting pipeline of scripted and unscripted programmes in Q2 and the remainder of the year as we further diversify the business by genre, by geography and by customer and grow ahead of the market ○    Scripted is growing strongly with programmes such as _Snowpiercer_ (USA), _The Outlaws_ (UK), _The Suspect_ (UK), _Django_ (Italy) and _Summertime_ (Italy) ○    Unscripted programmes expected to be delivered this year include _Hell’s Kitchen USA, The Chase USA,_ as well as _Love Island_ in the UK, USA, Australia, Netherlands, Spain and Germany ●    Revenues from streaming platforms globally continue to grow with development deals or commissions with most of the major streaming platforms including _Inganno_ and _One Piece_ for Netflix, _Love Island USA_ for Peacock and a Benjamin Franklin drama for AppleTV+ ●    Our new labels set up through our recent talent deals have an impressive slate of programmes including _Night in Paradise_ from Windlight Pictures for Starzplay_, Nolly_ from Quay Street Productions for ITV and _Litvinenko_ from Patrick Spence for ITV and Viaplay ●    We continue to focus on advancing our digital innovations in ITV Studios to drive efficiencies and create a more sustainable way of working. This includes remote and cloud based editing and virtual production sets **Media and Entertainment:** _Progress in the delivery of ITVX:_ ●     The launch of ITVX is on track for Q4 2022 ●     Continuing to strengthen and evolve ITV’s streaming experience with ○    Significant increase in the content available for streaming with 6,000 hours of content, up from 4,000 at the end of December 2021 ○    Warner content is now available including titles such as _The Sex Lives of College Girls, The OC_ and _One Tree Hill_ ○    Majority of scripted programmes are available for streaming in full at the same time as initial broadcast. This has helped drive the best ever start to the year for drama viewing online with 125 million streams for the four months to the end of April, up 8% year on year ○    Product developments including rolling out new features such as start again, search improvements to improve accuracy, increased personalisation such as onward journey recommendations and design enhancements ○    Successfully working with distribution partners to ensure that ITVX will be widely available at launch ●     BritBox UK has rolled out an exciting line up of new original content, including _Why Didn’t They Ask Evans_ and _Murder in Provence_, growing subscriptions since the beginning of the year ●     Planet V, ITV’s leading addressable advertising platform, now has in excess of 1,300 users (up from over 1,000 at 31st December 2021) and in Q1 attracted almost 50 new digital-only advertisers to ITV _Key performance indicators_ ●    Total digital revenues grew 24% in Q1 with strong growth in digital advertising revenues up 27% and subscription revenues up 37% ●    Total streaming hours on ITV Hub, ITV Hub+ and BritBox UK were up 8% in Q1. ITV has taken the strategic decision to reduce the availability of pre-transmission drama drops and box sets outside of its own streaming services, such as on Sky and Virgin, where we cannot serve and monetise dynamic advertising. Therefore, this decision does not reduce existing revenues. Over time and with the launch of ITVX we anticipate that we will see this viewing move to ITV’s streaming services and be more effectively monetised. The transitional impact of this decision has been the overriding driver of a 7% reduction in total streaming hours in the quarter, across all platforms ●    We increased our share of linear viewing with ITV’s share of commercial viewing( SOCV) for the three months to the end of March of 34.5% (2021: 34.1%) ●    ITV continues to deliver the majority of commercial mass audiences with 93% share of top 1,000 commercial broadcast TV programmes in Q1 (2021: 92%) ●    BritBox International is delivering good growth in subscriptions in line with our plan across the US, Canada, Australia and South Africa and the recent successful launch in the Nordics including Sweden, Denmark, Norway and Finland **Driving positive change through our social purpose priorities** ●     ITV’s Concert for Ukraine raised £13.4m for the Disasters Emergency Committee’s appeal for Ukraine ●     Launched two successful campaigns in the quarter – Eat Them to Defeat Them to promote healthy eating and the ITV2 partnership with CALM to support younger people’s mental health **Outlook** ●     ITV Studios is performing strongly and is on plan for the year, taking advantage of the strong global demand for content ●     As expected, advertising comparatives get much tougher in Q2 and Q3 against the Euro Football championships in 2021 and we are mindful of the macroeconomic and geopolitical uncertainty ○    Q2 2022 TAR, as expected, is forecast to be down around 6% against strong comparatives in Q2 2021 when TAR was up 89% compared to 2020. H1 is expected to be up around 5% compared to the same period in 2021 ○    April 2022 TAR was up 9% and we forecast May to be down around 8% and June to be down around 15% compared to the same period in 2021 ○    Compared to 2019, Q1 TAR was up 12%, Q2 is forecast to be up around 2% and H1 TAR is forecast to be up around 7% ●     ITV is well positioned to deliver ITVX, as a free, ad-funded streaming service, with our deep relationships with advertisers, strong demand for Planet V and a significant track record for growing digital advertising revenues. We remain confident that this will enable us to deliver at least £750 million of digital revenues by 2026 ●     We are on track to deliver our previously announced £17 million cost saving target for 2022 ●     The 1 January 2020 actuarial valuation of the main section of the ITV Pension Scheme was agreed during the period, with the documentation currently being finalised. On the basis agreed with the Trustee, the deficit as at 1 January 2020 amounted to £252 million, down from £489 million at 1 January 2017. The Group has revised the existing deficit reduction contribution plan in order to eliminate the deficit of £252 million (see notes to editors for further details) ●     ITV’s strong balance sheet and free cash flow generation enables it to fund investments to deliver its digital acceleration and returns to shareholders ** NOTES TO EDITORS** 1.  Unless otherwise stated, all financial and operating figures refer to the 3 months ended 31 March 2022, with growth compared to the same period in 2021. 2.  Group financial performance | Revenue for 3 months to 31 March (£m) | **2022** | **2021** | **Change****£m** | **Change****%** | | Media and Entertainment | 545 | 483 | 62 | 13% | | ITV Studios | 458 | 373 | 85 | 23% | | **Total revenue** | **1,003** | **856** | **147** | **17%** | | Internal supply | (169) | (147) | (22) | 15% | | **Total external revenue** | **834** | **709** | **125** | **18%** | Note: 2021 comparatives have been restated to reflect the reclassification of gaming, live events and merchandising revenues from the M&E business to Studios. The impact is a £1 million transfer from M&E to Studios. | Revenue for 3 months to 31 March (£m) | **2022** | **2021** | **Change****£m** | **Change****%** | | Total advertising revenue | 468 | 402 | 66 | 16% | | Non-advertising revenue | 535 | 454 | 81 | 18% | | Internal supply | (169) | (147) | (22) | 15% | | **Total external revenue** | **834** | **709** | **125** | **18%** | 3.  Total advertising revenue (TAR), which includes ITV Family NAR, digital advertising and sponsorship, was up 16% over the 3 months to the end of March. Within this, January was up 15%, February up 20%, and March up 15% compared to the same periods in 2021. TAR is forecast to be down around 6% in Q2 against very tough comparatives in 2021, which was up 89%. In 2022, April was up 9%, and May is forecast to be down around 8% and June to be down around 15% compared to the same periods in 2021. Figures for ITV plc for May and June are based on ITV estimates and current forecasts. **4. Media and Entertainment key performance indicators ** | Three months to 31 March | **2022** | **2021** | **Absolute change** | **Change****%** | | **Total digital revenue (£m)** | £82m | £66m | £16m | 24% | | **Total streaming hours (hrs)** | 247m | 267m | (20m) | (7%) | | **Share of commercial viewing (SOCV)** | 34.5% | 34.1% | 0.4pts | | | **Share of top 1,000 commercial broadcast TV programmes** | 93% | 92% | 1pt | | ●      Total digital revenue includes online advertising revenue and subscription revenue as well as linear addressable revenue, digital sponsorship and partnership revenue, ITV Win and any other revenues from digital business ventures. ●      Total streaming hours measures the total number of hours viewers spent watching ITV across all streaming platforms. This figure includes viewing funded by digital advertising and subscriptions. ●      ITV Family share of commercial viewing is the total viewing of audiences over the period achieved by ITV’s family of channels as a proportion of all ad-supported commercial broadcaster viewing in the UK. ITV Family includes ITV, ITV2, ITV3, ITV4, ITV Encore, ITVBe, CITV, ITV Breakfast, CITV Breakfast and associated “HD” and “ +1” channels. ●      The share of top 1,000 commercial broadcast TV programmes KPI includes TV viewing from transmission and seven days post-transmission on catch up, as well as six weeks prior to the transmission window. It excludes programmes with a duration of